Obama Administration

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The Torture Memos Released

President Obama did the right thing by releasing the Bush Justice Department memos providing a legal justification of torture and in deciding not to prosecute the interregators.  The ones who should be prosecuted are the memo writers who, rather than upholding the Constitution, international law, and basic American values, caved in to people like Vice President Cheney – and perhaps even Cheney, Rice, Rumfeld and Bush.

In his statement accompanying the release, President Obama said

The Department of Justice will today release certain memos issued by the Office of Legal Counsel between 2002 and 2005 as part of an ongoing court case. These memos speak to techniques that were used in the interrogation of terrorism suspects during that period, and their release is required by the rule of law.

My judgment on the content of these memos is a matter of record. In one of my very first acts as President, I prohibited the use of these interrogation techniques by the United States because they undermine our moral authority and do not make us safer. Enlisting our values in the protection of our people makes us stronger and more secure. A democracy as resilient as ours must reject the false choice between our security and our ideals, and that is why these methods of interrogation are already a thing of the past.

…

The United States is a nation of laws. My Administration will always act in accordance with those laws, and with an unshakeable commitment to our ideals. That is why we have released these memos, and that is why we have taken steps to ensure that the actions described within them never take place again.

It will no doubt be argued that this may, in fact, leave President Bush and other high ranking members of his administration open to prosecution in international criminal courts such as the one in Spain which as already begun an inquiry.  These, memos, people will argue, only add fuel to the fire.  We can’t have our elected officials held accountable for actions they thought were legal they will argue.

To them I say:  The high ranking officials in Hitler’s government also thought they were acting under the cover of law.  Maybe they didn’t have Justice Department lawyers writing the justifications, but those brought to trial at Nuremburg did not believe they had done anything wrong either.    This is why we now have United Nations Convention on Torture. 

  1. For the purposes of this Convention, torture means any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as obtaining from him or a third person information or a confession, punishing him for an act he or a third person has committed or is suspected of having committed, or intimidating or coercing him or a third person, or for any reason based on discrimination of any kind, when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. It does not include pain or suffering arising only from, inherent in or incidental to lawful sanctions.

…

  1. Each State Party shall take effective legislative, administrative, judicial or other measures to prevent acts of torture in any territory under its jurisdiction.
  2. No exceptional circumstances whatsoever, whether a state of war or a threat or war, internal political instability or any other public emergency, may be invoked as a justification of torture.
  3. An order from a superior officer or a public authority may not be invoked as a justification of torture.

I haven’t read the entire test of the memos, but did not we commit war crimes?  Certainly the international agreement about torture was violated.

If we are a great nation, and I believe we are, we must lead not only by words, but also deeds.  I understand the political reasons why President Obama cannot be seen as bringing members of the previous administration to trial, but I see no reason why others, like Congress,  cannot do the ground work and present evidence to prosecutors and the courts.  It is probably better to do it ourselves than to leave it to Spain. 

At the very least, none of those Bush officials can travel outside of the United States without risking arrest.  Oh, I forgot, they better not set foot in Vermont either.

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Let’s Tea Party

I don’t know how anyone else feels but I think it is very clear that the Republican Party is caught in a timewarp.  Maybe not 1980, but sometime in the early Reagan Year or even pre-Reagan years.  And they are also trying to be 2009 hip.  The combination is ripe for hilarlity – unfortunately for the Republicans.  First there was Chairman Steeele saying he wanted to appeal to the hip hop crowd kinda like Karl Rove and his famous rap, I guess.  Now there is tea-bagging.  The tea baggers don’t seem to get it that we did really well with the higher tax rates – look at the Clinton years.  It is the Clinton tax rates the President wants to restore.

The original Boston Tea Party in 1773 protested the tax on tea without representation in Parliament.  If I recall my history, we had not yet decided to split from Mother England but just wanted to have some guys in Parliament.  I don’t think it was a protest on the tea tax directly.  The tax on tea touch everyone.  President Obama’s tax plan only effects the very top earners since the rest of us will get a little cut.  Bruce Bartlett, writing in Forbes.com, has posted some very interesting statisitics.

Next week is April 15, the day when most Americans have to file their federal income tax returns. To protest the allegedly high level of taxation in the United States, various right-wing groups are organizing tea parties around the country in the spirit of the Boston Tea Party of 1773.

The irony of these protests is that federal revenues as a share of the gross domestic product will be lower this year than any year since 1950. According to the Congressional Budget Office, the federal government will take only 15.5% of GDP in taxes this year, compared to 17.7% last year, 18.8% in 2007 and 20.9% in 2000.

The truth is that the U.S. is a relatively low-tax country no matter how you slice the data. The following tables illustrate this fact by comparing the U.S. to other members of the Organization for Economic Cooperation and Development, a Paris-based research organization.

As Table 1 shows, total taxation (federal, state and local) amounted to 28% of the GDP in the U.S. in 2006. Only four of the 30 OECD countries had a lower tax ratio. Taxes averaged 35.9% for the OECD as a whole and 38% in Europe. Citizens of Denmark and Sweden paid very close to 50% of their total income in taxes.

Table 1: Total Taxes as a Share of GDP, 2006

Denmark

49.1

U.K.

37.1

Ireland

31.9

Sweden

49.1

Hungary

37.1

Greece

31.3

Belgium

44.5

Czech Rep.

36.9

Australia

30.6

France

44.2

N.Z.

36.7

Slovak Rep.

29.8

Norway

43.9

Spain

36.6

Switzerland

29.6

Finland

43.5

Luxembourg

35.9

U.S.

28.0

Italy

42.1

Portugal

35.7

Japan

27.9

Austria

41.7

Germany

35.6

Korea

26.8

Iceland

41.5

Poland

33.5

Turkey

24.5

Netherlands

39.3

Canada

33.3

Mexico

20.6

Source: OECD

Bartlett ends with an interesting observation. (I should say that he also has other charts comparing individual tax rates.)

The point is that one can’t look just at the taxes people pay here or elsewhere without looking at what they get in return. It doesn’t automatically follow that the places with the lowest taxes are the best places to live and work. This is obvious when we think about where to buy a house. We always look at the quality of local schools as a major factor and are willing to pay higher property taxes in return for good schools. The same is true at the national level as well. Higher taxes may pay for services that people value and thus are not as burdensome as they might appear at first glance.

So what are these tea parties really about?  And is this the best the Republicans can do to find a voice?  Once again we have to turn to Rachel Maddow.  Gabriela Resto-Montero writes this intro for the Nation

The “Tea Bag” movement spawned by a rant on CNBC by Rick Santelli seeks to protest the Obama tax cuts by imitating the revolutionary fathers’ Boston Tea Party, which in fact protested taxation without representation (the opposite of a tax cut). While the logic behind the protest is confusing, the right-wing’s complete lack of awareness about the term “Tea Bagging” is even more so. Rachel Maddow and Ana Marie Cox have some fun at the expense of clueless conservatives and point out that at long last Senator David Vitter may have found a worthy cause to champion.

And I have a really stupid question:  Are they throwing in the tea or the entire tea bag?  If it is the entire tea bag, they are really polluting our lakes and rivers with paper made not to dissolve in water.

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After the G-20

The meeting seemed to go well.  The world leaders fell all over themselves to get pictures with President Obama who was his usual cool self even though he didn’t get the Europeans to cough up  stimulus/recovery money of their own.  They seem to like the idea of regulations a lot more.  

 I wrote a piece a few weeks ago on the Gramm, Leach, Bliley Act as an example of degegluation that led to things like AIG.  I think the Europeans at the G-20 would like us to reinstitute some things like a version of the Gramm, Leach, Bliley Act.  Are the Administration and Congress really waiting to see the economy stabilize before the begin to write regs, or is it just a big stall hoping we will forget about it? 

Paul Krugman wrote an interesting op-ed yesterday in which he tied bankers/financiers salaries to bad stuff happening. 

Thirty-plus years ago, when I was a graduate student in economics, only the least ambitious of my classmates sought careers in the financial world. Even then, investment banks paid more than teaching or public service — but not that much more, and anyway, everyone knew that banking was, well, boring.

In the years that followed, of course, banking became anything but boring. Wheeling and dealing flourished, and pay scales in finance shot up, drawing in many of the nation’s best and brightest young people (O.K., I’m not so sure about the “best” part). And we were assured that our supersized financial sector was the key to prosperity.

Instead, however, finance turned into the monster that ate the world economy.

This is a cycle that began during the Great Depression

Before 1930, banking was an exciting industry featuring a number of larger-than-life figures, who built giant financial empires (some of which later turned out to have been based on fraud). This highflying finance sector presided over a rapid increase in debt: Household debt as a percentage of G.D.P. almost doubled between World War I and 1929.

During this first era of high finance, bankers were, on average, paid much more than their counterparts in other industries. But finance lost its glamour when the banking system collapsed during the Great Depression.

So now we have the heads of AIG, CitiBank (or whatever they call themselves now) saying they deserve their money and bonuses even though they contributed mightily to the current recession.  Even Larry Summers is fat and happy from feeding out of the financial trough.  Robert Sheer writes in The Nation

Not surprisingly, Lawrence Summers is convinced that he deserved every penny of the $8 million that Wall Street firms paid him last year. And why shouldn’t he be cut in on the loot from the loopholes in the toxic derivatives market that he pushed into law when he was Bill Clinton’s treasury secretary? No one has been more persistently effective in paving the way for the financial swindles that enriched the titans of finance while impoverishing the rest of the world than the man who is now the top economic adviser to President Obama.

It is especially disturbing that Summers got most of the $8 million from a major hedge fund at a time when such totally unregulated rich-guys-only investment clubs stand to make the most off the Obama administration’s plan for saving the banks. The scheme, as announced by Treasury Secretary Timothy Geithner, a Summers protégé, is to clean up the toxic holdings of the banks using taxpayer money and then turn them over to hedge funds that will risk little of their own capital. At least the banks are somewhat government-regulated, which cannot be said of the hedge funds, thanks to Summers.

 It was Summers, as much as anyone, who in the Clinton years prevented the regulation of the hedge funds that are at the center of the explosion of the derivatives bubble…

So do we have the makings of another crisis rather than a solution?  Here is Krugman again

The banking industry that emerged from that collapse was tightly regulated, far less colorful than it had been before the Depression, and far less lucrative for those who ran it. Banking became boring, partly because bankers were so conservative about lending: Household debt, which had fallen sharply as a percentage of G.D.P. during the Depression and World War II, stayed far below pre-1930s levels.

Strange to say, this era of boring banking was also an era of spectacular economic progress for most Americans.

The bottom line is we need to make banking boring again by regulating it so the Larry Summers of the world don’t get all the gain and the rest of us can do well also in our more modest way.

And finally, in case you missed it, is Paul Krugman on the Rachel Maddow show.

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Cutting the Defense Budget

How do you tell someone their favorite defense program is no longer going to be funded?  Secretary Gates did it as well as anyone could have when he made his announcement earlier this week.  I think that will turn out to have been the easy part.

So what are people saying about his proposals?

From the Boston Globe  article titled “Deep Cuts, New Chances”

For the defense sector, which in recent years has posted big profits from a rapid run-up in military spending, the new focus was a mixed message. Big programs appear to be in jeopardy, but others may be built up under Gates’ plan.

“This budget represents an opportunity, one of those rare chances to match virtue to necessity, and ruthlessly separate appetites from real requirements,” Gates said of his $534 billion spending plan for the 2010 fiscal year.

Many defense stocks jumped Monday even as the broader market fell. Shares of Lockheed Martin Corp. and Northrop Grumman Corp. each rose nearly 9 percent. Analysts said the big gains, which occurred as Gates made his early afternoon speech, were likely because the budget cuts were not as bad as some investors had anticipated.

The New York Times said the reaction was mixed

Members of Congress and advocates for the armed services pushed back on Tuesday against Defense Secretary Robert M. Gates’s plans to pare billions of dollars from a variety of Pentagon weapons systems, but others said that the cuts were prudent and that fights over them would be limited to several leading programs.

Military analysts said the biggest lobbying campaigns would be focused on Mr. Gates’s proposed cutbacks in the F-22, the advanced stealth fighter that critics call a relic of the cold war, as well as his trimming of the Army’s $160 billion modernization project, called the Future Combat Systems.

Members of Congress from Georgia and Oklahoma, where the jet and the Army project mean jobs, promised a fight. The arguments, which were frequently directed by Republicans against one of their own — Mr. Gates, one of two Republicans in President Obama’s cabinet — were cast in terms of national security and moral responsibility.

But the best commentary is from Jon Stewart in a segment titled “Full Metal Budget”

The fight between regions, technologies and the future of the military has begun.

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Credit Card Blues

Like most Americans I use credit cards.  I use them to buy online and to save the hassle of carrying cash.  Mostly these days I use my debit card but credit cards are great if your stove dies and you need to pay a repairperson or buy a new stove.  Or help with expenses if you are going to graduate school late in life as I did.  But they are a trap.  I remember a time when I cringed if I didn’t pay off the balance each month.  Those days are long gone.

James Surowiecki wrote a great piece for the New Yorker’s  Financial Page  in which he explains very clearly why credit cards companies need regulation as badly as the other financial markets.

It’s little wonder, then, that credit-card companies are now scrambling to shed the customers they think are most likely to default, and to limit the amount that others can spend. In effect, they’re trying to follow the advice given by Larry Selden and Geoffrey Colvin in a book called “Angel Customers & Demon Customers.” Not all customers are equal, it turns out: some are tremendously profitable, while others, like the guy who calls customer service six times a day to check his account balance, cost more than they’re worth. To boost profits, you must cultivate the angels and protect yourself against the demons.

That sounds easy enough. But credit-card companies have created a strange business, in which there’s a fine line between good and bad customers. Their best customers aren’t those who dutifully pay off their balance every month; instead, they’re the ones who charge a lot and pay only a little every month, carrying a sizable balance and racking up interest charges and late fees. These are the “revolvers,” and the credit-card business feeds on them. Credit-card companies don’t necessarily want revolvers to pay off their debts; if they did, there’d be no interest or fees to collect. They want their loans to be, in the words of a banking regulator, “a perpetual earning asset.”

One of the things that credit card companies are doing is increasing interest rates – even on money borrowed at a lower rate.

This increase is partly a response to the greater risk of default, but it also takes advantage of the recession. Many cardholders don’t have enough money to pay off their balance in full, so when interest rates rise they aren’t able to just close their account and get a different card. Effectively, they’re captive customers. And since credit-card companies, unlike most lenders, are allowed to change the terms of their loans at any time, people who borrowed a big chunk of money at, say, nine per cent may now be paying seventeen per cent on the loan.

These tactics are not going to improve the credit-card industry’s dismal reputation. They’re also not going to help an economy in recession, since reduced credit lines take away an important cushion for consumer spending, and higher interest rates and increased fees are likely to drive more people to default. But the odd thing is that while less access to revolving credit is a bad thing for us in the short run, having people rely less on credit cards is a good thing in the long run.

Will Congress and the administration step up to help ease this transition?  A good first step would be higher rates only on new balances to let people pay off the old ones at a reasonable rate – both time and interest.

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Making Sense of the G-20

OK.  All the leaders of all these countries got together in London.   Before the meeting it looked like the bad boy from Dick Cheney’s “old Europe”, Mr. Sarkozy of France, would walk out, leave the meeting in a huff.  Never happened.  Instead, President Obama, the new kid, got France and China to agree on some critical language on tax havens.  The world seemed astonished that a president of the United States of America could actually walk and chew gum. 

I first saw this in Friday’s print addition of the New York Times (yes, I still love that newsprint and reading without staring into a lit screen.) and after some searching found the online link and it turns out it is actually a blog turned into print.  Go figure.  Anyway, this story was titled “On a Scale of 1-10, G-20 scores a 7.” 

For someone like me who is struggling to understand the details of the economic crisis it helped decode the G-20 meeting by lisiting the 10 issues which needed to be addressed and how they did in addressing them.   The authors are Edward Hadas and Christopher Hughes.

The G-20 deserves a mark of seven out of 10. The London summit meeting, which concluded Thursday, hasn’t solved everything. But it has made important strides in both battling the current crisis and preventing future ones.

The score comes by grading the world’s leaders on the top 10 issues the G-20 faced. Each issue was scored with a zero, half a point or a whole point. But note that this is not a finely calibrated exercise. Zero doesn’t mean the G-20 achieved absolutely nothing; equally, a whole point doesn’t mean perfection.

The high scores went to fiscal stimulus, trade finance, preventing financial crisis, tax havens and confidence.  I think this last one is important because the part of the global fiscal crisis is created by uncertainty and fear.

The zero went to trade imbalances, while the rest got half points: making banks healthy, fighting protectionism, increasing the International Monetary Fund, and exit strategy.

In his Friday column about China and the dollar, Paul Krugman ended with this

The bottom line is that China hasn’t yet faced up to the wrenching changes that will be needed to deal with this global crisis. The same could, of course, be said of the Japanese, the Europeans — and us.

And that failure to face up to new realities is the main reason that, despite some glimmers of good news — the G-20 summit accomplished more than I thought it would — this crisis probably still has years to run.

I think the sticking point is that pesky financial regulation issue never mind stimulus money.  Jordan Stancil put it this way in the Nation

Abelshauser [Werner Abelshauser, an economic historian at the University of Bielefeld in Germany and a leading expert on differences in transatlantic economic cultures] argued that it’s hard to change these deeply rooted practices; therefore, Europe can’t succeed under deregulated finance, since it destroys the stability on which Europe’s economy relies. Abelshauser thought a positive outcome of the crisis would be that Europe would return to its proven model of finance.

This is an important point, because it underscores the extent to which the crisis for Europeans is fundamentally about re-establishing a financial system they think serves their interests. Thus the Euro- American debate isn’t really about whether to do stimulus or regulation first–it’s about whether the United States is going to do regulation at all.

America lacks credibility on this count, partly because Obama has not taken a strong stand against the power of finance in the United States. On the contrary, he plans to use taxpayer dollars to subsidize purchases of “toxic assets”–now renamed “legacy assets.” Against that background, the newly stern rhetoric of erstwhile deregulators like Larry Summers is not convincing because it’s clear that the Obama administration is not using the collapse to reorganize American banking along healthier lines. Instead, the US position calls to mind a line from Rousseau’s Confessions: “I pretended to reproach myself for what I had done, in order to excuse what I was going to do.”

The significance of this has not been missed in Europe. Jacques Attali, a key economic wise man in France who has advised both Socialist and conservative governments, told a business daily, “The bankers [in the United States] are going to accept a minimum of regulation. Not more. We see this clearly with the Geithner plan, which reinforces the mechanisms that led to the crisis…. Besides, do you think it’s normal to have taxpayers loaning money to investors so the investors can make profits?” According to Attali, there will be no fundamental change in US behavior on questions like leverage, securitization and debt because “the Anglo-Saxon world lives off that.”

I think this is the big problem.  Will the Obama administration listen only to people like Larry Summers and Tim Geithner who believe in the  American Capitalism free for all or will we move on to a more regulated system that protects the middle class and creates more equality?  Or will he also isten to France and Germany and Paul Krugman?  I thought a hallmark of the Obama administration was to be the ability to listen to opposing points of view before making a decision.

The compromise between France and China on tax havens negotiated by President Obama shows that we could compromise also.  Regulation in the United States could land closer to Europe without us becoming, to the horror of Republicans, just like Europe.  I’m not sure this is an either or situation, but we do need more regulation of the financial industry.  Congress and the President just need to act soon.

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Obama’s Press Conference at 60+ days and other Presidential Matters

How’s he doing?  I thought the press conference last night showed a more subdued President Obama.   David Biespiel said on Politico’s Arena

Overall: Professor in chief. I saw the news conference on CNN from my hotel room. Will cable TV present every Obama news conference as if it’s the last night of Yalta? I disagree with the interpretation that these night time press conferences should be for dramatic events only. Meeting with the press monthly on prime time is good for democracy–whether the climate is dramatic or not. 

I tend to agree with him.  I don’t think the President is at his best with press conferences – he seems to do better with town hall meetings – but they are informative.  Maybe he should think about a prime time town hall meeting.

Thomas Mann from Brookings said on Politico’s Arena

What struck me about last night’s press conference was how the President managed both to maintain his signature leadership style — cool, intelligent, knowledgeable, and reasonable — and to forcefully advocate his position that his economic recovery program and his budget are inextricably linked. He also signaled clearly, especially in his closing remarks, that he fully understands the obstacles he faces and that some of his priorities will take years to accomplish. It appears he will continue to aim high with an ambitious agenda in spite of the clamor of critics for cutting back on his objectives. In a world in which an exclusive focus on short-term gains has dominated behavior in government and in the private sector, Obama is planning an eight-year program of governance that aspires to grapple seriously with long-term challenges.

Which leads me to talk about the Republican opposition.  Several Republicans posted on the Arena their disappointment that there was no real opposition agenda.  I believe that the President has also pointed out that there is no alternative budget so there can be a real discussion.

Eugene Robinson wrote in today’s Washington Post

Some listeners thought they heard flexibility or even retreat on the president’s ambitious agenda of health care, energy and education. I heard the opposite — a single-minded focus on these three initiatives, which Obama maintains are vital if the economy is to be put on sound footing. His strategy is to let Congress work out the details, but he was clear that he expects all of the Big Three to be reflected in the budget. One thing we’ll learn about him, the president said, is that he’s persistent. I’m going to take him at his word.

If you recall, Barack Obama stuck to a consistant message throughout his campaign.  He never let himself get sidetracked to drawn into debates he didn’t want to have.  I think last night showed he is still the same person, that what we saw during the campaign is what we got as a President.

One negative note to my evaluation of his first 60 days.  I am still worried about some of his appointments, particularly in the economic area.  As I have said before I am very very skeptical about Larry Summers in particular.  Christopher Hayes gave this piece of advice back in January and I think it is still relevant.

But as the Obama administration continues to fill thousands of government positions, they’d do well to heed the words of a wise man who once said that “tallying up your years in Washington is no substitute for judgment.” That was President Obama, whose primary campaign was largely predicated on the principle that having gotten something crucial, like the Iraq War, right when other people got it wrong was of such overwhelming importance that voters should elevate someone who’d been a state senator just a few years earlier to the highest office in the land over a competitor with years in Washington under her belt.

The voters agreed, and I continue to think they got it right. Maybe the president should go back and read some of his old speeches the next time there’s an opening in his administration.

And not to beat a maybe dead horse:  where is a job for Howard Dean?

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Paul Krugman v. Tim Geithner

It is no secret that I’m not an economist.  I have long depended on Paul Krugman to help me understand what was going on.  And given the current state of the world, I seem to be blogging about economics a lot.

So is the Tim Geithner toxic assets plan viable or not?    Larry Summers (against whom I have a grudge because of what he did to Cornel West while president of Harvard) took at slap at Paul Krugman’s op-ed piece saying “I wish he waited for the plan to be announced before he wrote his column.” 

What exactly did Paul write?

And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.

It’s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that their economic vision is clouded by excessively close ties to Wall Street. And by the time Mr. Obama realizes that he needs to change course, his political capital may be gone.

Let’s talk for a moment about the economics of the situation.

Right now, our economy is being dragged down by our dysfunctional financial system, which has been crippled by huge losses on mortgage-backed securities and other assets.

As economic historians can tell you, this is an old story, not that different from dozens of similar crises over the centuries. And there’s a time-honored procedure for dealing with the aftermath of widespread financial failure. It goes like this: the government secures confidence in the system by guaranteeing many (though not necessarily all) bank debts. At the same time, it takes temporary control of truly insolvent banks, in order to clean up their books.

If I understand him correctly, what Krugman is worried about is 1) should we have just gone ahead and nationalized the banks temporarily and gotten it over with and 2) if the plan doesn’t work does it will Congress vote more money to nationalize.

I think Krugman is a great economist, but he maybe underestimating the larger political situation.  I think President Obama believes that health care reform and, to a less extent, eduational reform are additional keys to turning the economy around.  Obama is already hearing the footsteps of those in Congress who are looking at the deficit and wanting to put the breaks on.  Obama wants to pass his budget. Therefore he didn’t want to pick my option 1 and nationalize the banks.  If the plan doesn’t work, option 2 is an unknown.

One thing I do know is that while the market did go up today and that Tim Geithner did do marginally better that his first disasterous press conference, I love Jonathan Mann of Rock Bottom Cookie’s new song, “Hey Paul Krugman”.  Mann extoles Krugman while putting Geithner down.  Great catchy song.  Listen to the song and sing along with the refrain.” When I listen to you it seems to make sense, when I listen to him [Geithner] all I hear is blah, blah, blah.”

At this point all we can do is hope that the Geithner gamble works out.  I’m sure that Paul Krugman will be the first to be happy if it does.

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Friday Night Random Thoughts

Why have I picked the wrong upsets in the first round?  I picked  Cornell over Missouri and VCU over UCLA for example and totally didn’t see Dayton beating West VA. 

Why is everyone so focused on the President’s Special Olympics “gaffe”?  I thought his dancing around the Tim Geithner question was much worse.  Besides all those special olympians are now going to get to bowl at the White House. 

Why hasn’t Norm Coleman surrendered yet?  I have read that it is expected that Al Franken will likely pick up some votes as the court studies some more ballots.  Then Coleman says he will appeal.  Franken is asking Coleman to pay his legal costs.  I think Minnesota needs an second Senator and let’s just certify the election and let Al take his seat.

Why is is always so cold on the first day of spring in Boston?  At least this year it isn’t snowing.

I wonder what criticism the Republicans will come up with about the White House vegetable garden?  Marion Burros had a lovely story in the New York Times yesterday.  Seems everyone will have to pull weeds, including the President.  I guess that will be more time he is wasting when he should be focused on the economy.

Will President Obama and Barney Frank acually suceed in rewriting the regulations concerning financial institutions?  Does anyone else remember when stock brokers were separate from banks and the twain was never supposed to meet?  Maybe we need to go back to those days?

The cats are gathering and telling me it is time to stop having random thoughts and focus on their dinner.

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Inequality in America

The Republicans can scream that President Obama, Nancy Pelosi, and Harry Reid want to move the country toward a European type socialism all they want while the gap between the rich and poor keeps getting larger.   As many have said (including me), the current AIG bonus debacle seems be symbolize the rich getting richer at the expense of the rest of us. 

Dalton Conley, Acting Dean of Social Sciences at New York University has written in the Nation of March 23 about the Human Development Index (HDI) which shows the United States as Number 15 in the world.  The index “The score consists of three dimensions: health, as measured by life expectancy at birth; access to knowledge, captured by educational enrollment and attainment; and income, as reflected by median earnings for the working-age population. ”

Conley writes

The president’s proposed budget will do much to bring progressivity back to the tax code. Upper-income households–which have gained the most over the past three decades–will contribute around 80 percent of federal revenues, and more modest incomes will finally catch some real tax relief. Meanwhile, the vast majority of Americans have applauded the administration’s move to impose limits on executive compensation by attaching strings to bailout money. The reason is one of basic fairness, of course. But it turns out that limiting the windfalls of the few may actually be good for us all. That’s because there appears to be a relationship in the United States between inequality–which is largely driven by an explosive rise in incomes at the top–and overall levels of human development.

…

This decline proceeded apace through the Reagan and first Bush administrations, during the go-go Clinton ’90s, and through the regime of George W. Bush. We have slipped in periods of budget deficits and during the largest surplus in US history. So something deeper about the structure of American society is probably responsible.

Of course, there are some pretty good suspects. There is, for example, the issue of nearly 50 million people who don’t have health insurance. There is the fact that college completion rates have been flat since the ’70s despite an increasingly technological economy. And there is the wage stagnation for the bottom half, a problem that has dogged us since the oil shock of 1973. But there is one larger force underlying these trends that has been gaining steam over the past three decades, and that’s income inequality.

So it seems that what the Republicans call “redistribution of wealth” might actually be good for our country.